Session 16 Flashcards
1
Q
What is an uncertainty-reducing strategy?
A
Used to hedge against risks created by uncertain competitive environments
2
Q
What are competition-reducing strategies?
A
Used to avoid excessive competition while the firm marshals its resources to improve its strategic competitiveness
(collusion)
3
Q
What is franchising?
A
Strategy where the franchisor uses a franchise as a contractural relationship to describe the sharing of its resources with its partners. BRAND NAME is often more important competitive advantage for franchisee
- alternative to pursuing growth the M&A
- attractive for fragmented industries (hotel/retailing) where no one has dominant market share
4
Q
What makes a successful franchising strategy?
A
- partners work closely together
- franchisor develops programs that transfer knowledge and skills to the franchisee
- franchisee provides feedback regarding how their unit could become more effective and efficient
5
Q
What are the risks of a cooperative strategy?
A
- Firm acts in a way its partner things is opportunistic (surfaces when formal contracts fail to prevent it and alliance is based on false trustworthiness)
- Misrepresentation of resources brought to partnership (more common when based on intangibles)
- Failed to make the resources commited to the cooperative strategy available to its partners (common in international cooperative strategy, language/culture can cause misrepresentation or trust expectations)
- One firm makes investments that are specific to the alliance while the partner does not (firm making investmnet is at relative disadvantage in returns earned)
